ESPN Surfing

Despite these signs that the economy is rebounding, real estate took another fall for the first quarter, credit is still hard to come by, and inflation seems inevitable.

So, how is the surf industry fairing in all of this? Well, we know there are some deals to Indo, unemployed surfers crowding up the line up, and the tradeshow season was a little dismal.

I assume that people are still going to come to the beach the next few months, and they're still buying slaps and rash guards. But is summer enough to really save the industry this year?

The best way to find out where we're at, is to talk to the guys who study this stuff day in and day out, the crew at Transworld Business. I recently had a little chat with Rob Campbell, the publisher of TW Biz. Campbell was on staff at Snowboarder and the Editorial Director at Future Action Sports, plus has an entire resume of shreddery behind him.

ESPN Surfing: So, what do you think? Will the summer be strong enough to stave off any more collapse?

Rob Campbell: Summer is definitely the strongest time of year, so we've got that going for us. The big question is "just how strong will it be?"

We work closely with a company called ActionWatchh that monitors actual point-of-sale data from a panel of over 200 independent shops. Their data shows that May through August is clearly the strongest time for actual surfboard sales. I know you might say, "Duh, that seems obvious," but it's interesting to see just how much stronger. Almost half of all surfboard sales for the year will take place during the summer months (May-August). So a strong summer sales season could put everything back on track for the entire year.

ESPN Surfing: That makes sense. Most surfers live in coastal towns and make more money in the summer. But I always thought soft goods carried the industry?

Rob Campbell: You're right. Softgoods have much higher margin and volume. According to ActionWatch, the average shop brought in $9,744 in surfboard sales last August. The same group of shops averaged $34,525 in apparel that same month. Plenty of people who don't surf buy lots of surf-inspired apparel, that's why the industry was able to see such explosive growth. But I think hardgoods is a good number to track because it indicates people who are actually getting more engaged in the sport, so they'll most likely come back to buy more apparel, accessories, etc. Of course, they'll probably be crowding your local line-up, too.

Softgoods also have a different seasonal sales pattern than hardgoods. Apparel sees a huge spike in August and December, for back to school and holiday sales.

ESPN Surfing: So, are we going to be at those numbers again this year?

Rob Campbell:
I think everyone would be happy with that. You see the term "cautious optimism" everywhere. I wish I had coined that term (laughs.) And don't forget "flat is the new up," or even 20 percent down is the new up." There are a lot of one-liners getting thrown around these days.

I do think people are generally saving more money than they have in the past.

ESPN Surfing: Well isn't that good for economics as a whole? Like we've learned a lesson?

Rob Campbell: Yeah. And when things go back to normal, a lot of people are thinking that it's going to be a different kind of normal, which is better in the long run. But I never underestimate the short attention span of consumers. If you extend more credit they'll most likely spend it. While I'd love to see the surf industry benefit from more "stimulus," I just don't think that's a sustainable economic model.

ESPN Surfing: So is there anyone in the surf industry who's killing it right now?

Rob Campbell: We've got some shops starting to say that they're actually making more money by selling less. That's because they've increased their margins by cutting their costs. If there's a bright side, it's that this whole process has made a lot of people better managers. That'll put those businesses in a stronger position when we start to emerge from the recession. It's also gotten to the point where some shops are doing well because they had their competition go out of business. Others are reporting sales increases. But some of those increases are based on working through the oversupply of product. You have to keep an eye on the difference between sales and profitability. They may be selling more boards, but at what price? Sometimes those boards are heavily discounted to liquidate inventory. That's why it's so good to hear about shops that are increasing their margins.

ESPN Surfing: Is this going to weed out some excesses in the industry?

Rob Campbell: Well, in the past some companies had managerial problems and made mistakes, but things were growing so quickly that they were hidden. The ones that were managed better to begin with are better prepared to get through this.

ESPN Surfing:
Was the snow industry's winter any indication of what shops can expect for the summer?

Rob Campbell:
There is a lot of crossover between surf and snow, but they're also very unique. It seems the surf industry has actually done better at working through excesses product. Snow was down about 5% at the specialty level, but the main chains were down 25%. This is all data from SIA [Snowsports Industries of America], which does a really good job of tracking all this stuff. Internet sales are actually up.

SIA's data shows that a great snow season can overcome a lot of other challenges. We really need to hope for it to start snowing early and not let up.

ESPN Surfing: Well, I would think people who aren't core snowboarders or surfers might not spend the money on something just to try it.

Rob Campbell: Right. Or they might say "Oh. Paintball guns are on sale, I'm buying one of those" instead of getting a new board. Specialty retailers make a big difference in that sense. They have less casual consumers than someone buying at a chain store.

ESPN Surfing: So, not that you consider this any kind of silver lining, but this must be a good time to publish a trade magazine.

Rob Campbell: Yeah, in a lot of ways it is. As people focus more on their business, we've gotten more attention. Our subscription numbers and site traffic are way up over the past year.

A big part of what we do is report the news, we can't help it if a lot of it's gloomy. Any mention of bankruptcy or layoffs drives traffic through the roof. But outside of the news, people are hungry for information and advice, so we try to provide that. Jeff Harbaugh's "Market Watch" column is really well read and respected for his insight. It's not bad to have a consultant with an MBA from Wharton dishing out some advice in the boardsports world.

We also try to supply a lot of 'How To' articles and as many resources as possible. It helps retailers to see what ideas other shops are using on a day-to-day basis. I think readers also like hearing that other people are up against it, too. We're kind of like a support group in that way.

—From there, the conversation turned into what boards we' re riding ourselves, local shapers, random business news, and our mutual friends. I am smarter every time I talk to this guy. He is dialed.